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I Need Adjustable Mortgage Help – How to Save Your Home From a Rising Adjustable Mortgage Payment

admin — Fri, 30 Apr 2010 08:44:50 +0000

The sub prime mortgage crisis and falling property values have left many home owners across the country in desperate need of some adjustable mortgage help.

While many of these borrowers need assistance many just do not know where to turn or who to call in order to save their homes.

How To Get Adjustable Mortgage Help

The very first thing you should do if your ARM has adjusted is to try and refinance into a fixed rate loan. This is by far the best way to stabilize your payments and get yourself squared away.

What If You Cannot Refinance Your ARM

If in the event you are unable to refinance you really only have one option left on the table and that is help from your current mortgage lender.

This starts with a simple phone call and explaining the situation to them. You may have to call and plead your case a few times for them to listen but it is an effort that is very well worth it.

What Will The Lender Do.

In most cases the lender will either change your loans terms to either a fixed rate or extend your adjustable mortgages fixed rate period.

The lender may also offer to let you make up any past due payments over time by either adding them to the back end of the loan or letting you add extra money to your payment every month until you get them paid back.

More and more the companies that hold mortgages are being very flexible to keep borrowers in their homes and foreclosures to a minimum, because after all they lose money on a foreclosed property.

For this method to be the most effective you must let your lender know about your adjustable mortgage problems early on. This is very important as it can save not only your home but also your credit rating!

By: Darin Sewell

How Can You Spot Mortgage Fraud?

admin — Mon, 22 Mar 2010 02:54:13 +0000

Each mortgage scam contains some type of misstatement, misrepresentation, or omission relied upon by an underwriter or lender to fund, purchase or insure a loan. Mortgage scam is easily practiced particularly where mortgage industry professionals are involved. The true level of mortgage scam is largely unknown because a significant portion of the mortgage industry is void of any mandatory fraud reporting and in addition, mortgage fraud in the secondary market is often under reported. Based on various industry reports and analysis, mortgage scam is pervasive and growing. Mortgage scam can be basically analyzed as:

* Fraud for Profit – Sometimes referred as “Industry Insider Fraud” and the motive is to falsely inflate the value of the property, issue loans based on fictitious properties or revolve equity. Based on existing approximate reports, eighty percent of all reported mortgage scam losses involve collaboration or collusion by industry insiders

* Fraud for Housing – An illegal action perpetrated solely by the borrower. This type of mortgage scam is done by a borrower who makes misrepresentations regarding his income or employment history to qualify for a large loan. The motive behind this scam is to acquire and maintain ownership of a house under false pretenses

Fraud for Housing can not be compared to the scam done by mortgage scam industry professionals which affect the borrowers. Predatory lending usually is targeted towards senior citizens, lower income and challenged credit borrowers. Mortgage lending representatives force borrowers to pay exhaustive loan settlement fees, sub-prime or higher interest rates, and in some cases, unreasonable service fees. The usual result is the borrower defaulting on his mortgage payment and undergoing foreclosure or forced refinancing. Our focus is to recognize the mortgage scam that could happen to us, the borrower.

MORTGAGE SCAM SCHEMES

False or Stolen Identity – A fake identity may be used on the loan application. The applicant may be involved in an identity theft scheme and use someones personal information without the true person’s knowledge.

Inflated Appraisals – An appraiser acts in collusion with a borrower and provides a misleading appraisal report to the lender. This report inaccurately states an inflated property value.

Silent Second Mortgage – Buyer of a property borrows the down payment from the seller through the issuance of a non-disclosed second mortgage. The primary lender believes the borrower has invested his own money in the down payment, when in fact, it is borrowed. The second mortgage may not be recorded to further conceal its status from the primary lender.

Nominee Loans – The identity of the borrower is concealed through the use of a nominee who allows the borrower to use the nominee’s name and credit history to apply for a loan.

Equity Skimming – An investor may use a nominee, false income documents, and false credit reports, to obtain a loan in the nominee’s name. Subsequent to closing, the nominee signs the property over to the investor in a quit claim deed which relinquishes all rights to the property and provides no guaranty to title. The investor does not make any mortgage payments and rents the property until foreclosure takes place a few months later.

Property Flipping – A property is bought, falsely advertised at a higher value, and then quickly sold. What makes this property illegal is that the appraisal information is fraudulent. The schemes typically involve one or more of the following; fraudulent appraisals, doctored loan documentation and inflated buyers income… Kickbacks to buyers, investors, property and loan brokers, appraisers, title company employees are common in this scheme. A home may be appraised for $100,000 but is actually worth $30,000.

Air Loans – This is a non-existent property loan where there is usually no collateral. A broker invents borrowers and properties, establishes accounts for payments, and maintains custodial accounts for escrows. They may even set up an office with a bank of telephones, each one used as the employer, appraiser, credit agency for verification purposes.

Foreclosure Schemes – Are one of the worst. The loan agents mislead the homeowners into believing that they can save their homes in exchange for a transfer of the deed, usually in the form of a Quit-Claim Deed, and up-front fees. The perpetrator profits from these schemes by re-mortgaging the property or pocketing fees paid by the homeowner without helping to prevent the foreclosure. The victim suffers the loss of the property as well as the up-front fees. Be aware of offers that promise to save homeowners who are at risk of defaulting on loans or whose houses are already in foreclosure. If you are near a foreclosure seek a qualified credit counselor or attorney to assist.

Mortgage Scam per e-Mail – Many of the emails imply that the recipient has already been approved for a loan by making a vague statement such as “we are accepting your mortgage application”. Recipients may believe that they are actually being offered a loan. These emails are basically just poorly implemented tricks to get recipients to click on the link provided and fill out a form which in turn will defraud you in one way or another. If enough information is provided, scammers might even be able to steal your identity. A lot of the sites will last only a few days before they are taken down. But new will arise as soon as they are suppressed. Often they consist of just one page containing a form.

There is no information about the company offering the service, no privacy policy or a legal document, and no contact options other than the form provided. Often,the form is not secure (https), which is a good indicator that the site is not legitimate. No credible company would expect potential clients to submit information via an unsecured form. Never deal with spammers, regardless of how attractive their offer may seem. If they are unscrupulous enough to send unsolicited email, or allow their affiliates to send unsolicited email, then they have immediately shown themselves to be untrustworthy and you should avoid them at all cost. In general try to avoid the use of online mortgage loans.

By: Urban Sotensek

Government Mortgage Relief Plan

admin — Tue, 02 Mar 2010 08:24:46 +0000

Nationwide news channels are filled with reports on the Obama stimulus plan and focused mostly on the 75 billion allocated by Obama’s administration for Mortgage Relief. Obama’s plan focuses on keeping up to 9 million people from foreclosure. Helping these homeowners avoid foreclosure is vital to stabilizing home prices and ultimately the economy.

The plan is pretty simple, give incentives to mortgage lenders for getting out of their seat and helping homeowners facing foreclosure. Something they should of done a long time ago. Many homeowners facing foreclosure have become drenched in debt, their debt to income ratio has far exceeded the guidelines for getting a mortgage in the first place. This can be attributed to predatory lending at which time the loan was originated, however; most homeowners are dealing with lower income due to job loss. Mortgage payments are typically the bulk of a homeowners debt.

Obama’s plan focuses on cutting mortgage payments to acceptable levels, which they have designated as 31% of the homeowners total income.

The other part of the plan would help homeowners which have a mortgage owned or guaranteed by Fannie Mae or Freddie Mac. Homeowners that are upside down on their mortgage, owing more than their home is worth, can refinance with a special program. Normally equity or LTV (Loan to Value) is a major factor in refinancing. The bank or lender is willing to take more of a risk if you have equity in your home. They believe homeowners are going to fight tooth and nail to keep their mortgage if it has 15-20% equity. Homeowners that are upside down on their mortgage currently have no options for refinancing into a lower mortgage rate. Their mortgage rates in many cases have adjusted and they are stuck with an inflated mortgage payment and declining home values. Removing these restrictions is estimated to help up to 5 million homeowners reduce their mortgage payments.

Keeping mortgage rates low for homeowners that can refinance and new homebuyers is key to stimulating the economy and keeping banks afloat. Mortgage rates may be reduced another .5 percent to a new historic low of 4% for a 30 year fixed mortgage. Overall the mortgage relief plan is solid, but it is not very clear how deep this crisis runs. The government has funneled billions of dollars into banks such as Bank of America, but they know little about the damage done to their balance sheets. From the sign of the banks declining market value and need for more bailout money it is safe to say the government may be in for a big surprise when they get a in depth look into the banks they have been assisting.

Waiting on mortgage relief for foreclosure relief from the government is not something recommended by most in the financial industry. If you are struggling paying your mortgage now you should see foreclosure help immediately.

By: Chris Timmons

Your Options When You Missed Two Mortgage Payments

admin — Wed, 13 Jan 2010 00:58:54 +0000

Home owners across the country are facing adjustable rate mortgages that having increasing payments that make on time payments next to impossible to make. If you are a home owner that is facing this stress because you missed two or more mortgage payments you need to be aware of how serious of a problem you face and what you can do about it.

Dealing With Multiple Late Payments

The first thought for people with past due mortgage payments is the fear of foreclosure and losing their home. While technically a mortgage lender can start to foreclose after just one late payment many lenders will not start until you are 120 days past due. So even with two missed mortgage payments you should still be in the safe zone, at least for a little while.

When you miss your first mortgage payment you will limit your ability to refinance with a conforming mortgage for a minimum of 24 months. You will also not be eligible for FHA or VA financing for a period of 12 months. The only way you will be able to refinance with multiple late payments is to get a sub prime mortgage, and you will more then likely be limited to borrowing no more then 70% of your homes appraised value.

Once you miss your second mortgage payment your options now almost begin to fade away into nothing. Since the recent sub prime crisis most of sub prime lenders programs for borrowers with multiple late payments have all but disappeared. The best option at this point is to call your mortgage holder and work out a repayment plan with them. If your loan was an adjustable mortgage you should ask them for a loan modification. This is where the lender will either give you a fixed rate mortgage or stop any additional rate increases for a set period of time.

The most extreme option for home owners who are missing mortgage payments is to sell the home and either move into a more affordable home or rent until they can save up a good down payment for a similar home. While no one wants to lose their home sometimes it is the best option, and in many cases it will inevitably happen through foreclosure. At the very least you can save your credit rating by selling the home before a foreclosure happens.

Honesty is going to be your best option when you are in this type of situation. Your mortgage holder will be more the likely to help you if you contact them early and are up front and honest with them about your current situation. But you should also be honest with yourself and never try to save a home you just cannot afford, it will wind up costing you more money, stress and credit points then it is worth.

By: Darin Sewell

How Do Second Mortgage Loans Work?

admin — Sun, 27 Dec 2009 11:05:30 +0000

If you need extra money for home improvements, debt consolidation or even to purchase an additional home then a second mortgage might be exactly what you are looking for to make that happen. However, when you hear the term second mortgage you might not be sure exactly what it means. To put it simply it is just another mortgage on your existing home. Basically you are borrowing money for one or more reasons and using your home as collateral.

The term “second” means that the loan you are taking out does not have priority on your home if for some reason you can’t pay it back on time. In all cases the initial mortgage on your home would be paid before any money would go toward a second mortgage payment. With that being said, the next question is why in the world someone would put their home up as collateral for money. Well, the answer is that you shouldn’t unless you are in a situation where you need a large amount of money fast.

Western Vista Federal Credit Union in Wyoming notes that a “second mortgage is what it says – the second loan against a specific piece of property. Consider this example: Let’s say you have a first mortgage on your home. The value is $100,000 and you have a $60,000 balance left to pay on your loan. The $40,000 difference is considered equity, or the part of the home that you own outright. If you wish to further borrow against that $40,000, you would be taking out a second mortgage on the home in order to do so. Why borrow against this equity? In many cases, the interest rate you pay on your mortgage is lower than many other types of loans. Interest is also frequently tax deductible for a first or second mortgage, but not necessarily for a car loan or a credit card.”

When a person borrows money against their home that’s a large chunk of change being used for collateral and it also allows the borrower to get a bigger loan. There are some disadvantages to second mortgages such as the fact that you are taking a chance with your home should something happen and you have trouble paying the second mortgage back.

Take a look at the interest rate on a second mortgage too. You can probably expect the rate to be a bit higher because it is riskier to the lender who knows that if a default occurs the primary mortgage gets paid first and then the second mortgage. You can also be choosy about a second mortgage so check more than one source when trying to make a decision. Watch out too for balloon payments, which is a payment that starts out low and rises as time goes by. If possible, choose a fixed interest rate. Also be aware that second mortgages, like any other loans, have additional closing costs. There are the appraisal fees, application costs and other closing costs that can be as random as title searches.

At the Mortgage101 they say, “Many companies will charge a fee for lending you money. The fee is usually a percentage of the loan and is sometimes referred to as “points.” One point is equal to one percent of the amount you borrow. For example, if you were to borrow $10,000 with a fee of eight points, you would pay $800 in “points.” The number of point’s mortgage companies charge varies, so it may be worthwhile to shop around.”
You also want to make sure you get a second loan that allows you to keep your first mortgage.

In the long run second mortgages are a good bet for home improvement financing and some second mortgages can even be extended for up to 20 years. Remember though, it’s not only home equity lines of credit that don’t outline the amount of the monthly payments so read your contract. There are many second mortgage loans that don’t either. Joe Prussack notes, “Everybody loves low monthly payments… These popular 2nds’ (second mortgages) also usually have adjustable rates so these loans aren’t for the faint hearted.” In this case, if you are one of the fainthearted then stick with a fixed interest rate versus one of the variable interest rate loans. This way you will know exactly what payments are expected each month be it for a second mortgage or another type of loan in order to secure a big ticket item that you have needed for the past few years.

By: Rita Cook

Second Mortgage Loans in Canada – How I Qualified and Saved My Credit

admin — Sat, 05 Dec 2009 19:10:32 +0000

The use of second mortgages by clients is more common then one would think. The common issue amongst my clients is what would the lender think and how would I qualify.

Income qualification is secondary to the LTV (Loan to Value) calculation on the property. The impact of the LTV is discussed in a future article (Second Mortgage Loan in BC with Bad Credit | LTV What the Heck is It?)

Where the income qualification comes in, is where the private lender determines if the client can survive and fund the balance of the 1st mortgage and the 2nd mortgage. Lenders in this category are not looking for trouble or foreclosures. They want to know that the clients can move forward and complete their obligation.

The income requirements can vary between the private lenders issuing second mortgages in BC.

Some private lenders have minimal requirements others look for complete confirmation of all income sources. The level of detail is usually tied to the rate. A lender of second mortgages who only considers LTV will usually have a higher tolerance for risk in the second mortgages they issue in BC. The rate will usually reflect the level of perceived risk.

Here is the interesting part, private lenders are intent on ensuring that the debt is paid. As I tell my clients…”The money people want their money” Not excuses, not we had a run of bad luck; sorry social services is down the hall.

The determination of income levels and personal budgets is an exercise that the borrowers should go through. No one wants to lose their house but that is precisely what will happen if you default on your second mortgage.

Prepare an analysis of what you make and how much you spend. Determine if you can make the mortgage payment, it may that the mortgage payment is less then your total payments today. However in some cases, such as when the tax man is knocking on your door with a lien, it is worthwhile considering the higher interest, fees and payments to ensure that your house remains your house.

Only .49% of mortgages in Canada are in default at any one time. The impact of a foreclosure will have a disastrous impact on your credit rating. Revising your lifestyle in line with your income may save your house and your credit rating.

Run the numbers, ensure that your income is sufficient to make the payments on the second mortgage. And on a final note, you may lie to your Momma; lie to the taxman but don’t lie to your mortgage broker when you are figuring out how to refinance your debt.

By: Duncan Seward